The Japanese publisher relied on a slate of big-budget western games through the last two quarters of its 2013 fiscal year, Wada said. This would be the first time the publisher leaned on its western assets so heavily without releasing a "blockbuster" in Japan.

Based on "game quality," Metacritic ratings, and genre, the publisher decided Sleeping Dogs had the retail potential to sell 2 to 2.5 million in Europe and North America in fiscal year 2013, Hitman: Absolution 4.5 to 5 million, and Tomb Raider 5 to 6 million. Square Enix forecasted each game would sell about 80 to 90 percent of its potential.

Sleeping Dogs and Hitman matched the low end with an expected 1.75 million and 3.6 million, but Tomb Raider was roughly 600,000 units short of its minimum forecast.

"We put considerable amount of effort in polishing and perfecting the game content for these titles, receiving extremely high Metacritic scores," Wada said. "However, we were very disappointed to see that the high scores did not translate to actual sales performance, which is where we see the substantial variance in operation profit/loss against the forecast."

The shortfall, combined with scrapping some casual productions and others made for a much worse than expected year for the publisher. Wada also confirmed that, after he steps down in June, he will leave Square Enix's management entirely.